industrial relations

Peter Strong: It’s time to take the complexity out of workplace relations

Peter Strong /

By any international measure, Australia is a great place to be an employee.

According to information from the OECD, Australia’s minimum wage is the highest in the world. We offer more paid recreation leave (30 days including public holidays) than countries such as Germany (29), the UK (28), Norway (28), Greece (24), Canada (16), China (16), Japan (10) and the US (0 mandated). We have a high level of paid sick and related leave in Australia (12 days) which is similar to the Netherlands, Switzerland, Sweden, Denmark, Finland, and Singapore. The US has no mandated sick leave.

Long service leave is only available in Australia and New Zealand, with some versions of furlough existing in very few countries. We do provide below the norm paid parental leave, which is being addressed regularly, and we have an exceptional superannuation system.

We of course have a small number of recalcitrant employers and to match that we have a high calibre world class ombudsman. So whether people want to argue for more or less leave and better or lesser conditions, the point is that the current conditions are good. In fact, they are very good by comparison with other developed economies of the world and we should aim to keep it that way.

We in small business recognise that getting and keeping good people means paying good wages and providing good conditions. We also recognise, however, that any increase in pay and conditions increases costs and complexity for small business — which ultimately means that small businesses employ fewer people than they otherwise might.

The main issue must be giving people access to permanent full-time work (if that is their wish) and the opportunity to enjoy the excellent conditions that already exist in this country.

We note recent concern about wages not increasing much over the last few years (and fair enough — we all want more money), but growth in small business profit has been lower than in the past too. It therefore does not make sense for wage costs to grow faster than the revenue and profit earned by the businesses that employ people in the first place. The fact that larger businesses appear to be increasing their profits also shows that we need to look at competition policy more closely to ensure the best return goes to those who work the hardest and are the cleverest: small business people and their workers.

The key to growing wages is to grow the national economy. Economic growth means business revenues grow and this creates growth in wages and new permanent jobs.

As once famously stated by former US President Bill Clinton, “It’s the economy stupid”. And any reasonable person can see that.

Within this context, it is disappointing to see how this basic fact gets lost in petty point scoring on workplace relations. And the furore surrounding the recent decision of the wholly independent Fair Work Commission on Sunday penalty rates, is a case in point.

Read more: Malcolm Turnbull to recommend penalty rates cuts be phased in, as Eric Abetz says changes should be grandfathered

The response of the unions to the Sunday penalty rates decision was nothing short of scandalous, particularly in relation to the false information that has been put about by them in recent days.

Sunday penalty rates were removed for more than 80% of Sunday workers several years ago, largely through the machinations of a major retail union, the Shop, Distributive and Allied Employees Association (SDA). The development of enterprise bargaining agreements with the biggest employers in retail and hospitality let the SDA force Sunday workers to take a cut in their penalty rates to help subsidise the pay of the SDA union members who are permanents working on weekdays.

The rhetoric around unions protecting vulnerable workers who work on weekends is therefore false. And the SDA is the culprit in decreasing Sunday rates.

Small businesses make up some 96% of all businesses in Australia. Small business people employ around half the Australian workforce — approximately 5 million people. There are up to 1 million workplaces in Australia where the number of workers is less than 20, and 60% of workplaces employ fewer than five people. We are a key part of the economy, of the country’s culture, diversity and of our innovation.

Small businesses do not have chief executives who are remote from the workplace and we don’t have experts such as pay clerks, occupational health and safety advisers, accountants and the like. In most small businesses, we work next to our employees and see them on a day-to-day basis. Therefore, we need a workplace relations system based on the needs of people in a small workplace.

The Fair Work Ombudsman has also acknowledged that the system is too complicated for small business and must change. The Ombudsman would find it easier to communicate, to regulate and where necessary, to prosecute, if the rules are simple and easy to understand.

So we need a simple award for small business — an award based on size not industry. This would give small business people the choice between using a particular ‘fit for purpose’ industry award or a simpler generic award. This would assist employees who also struggle to understand the current system

Now is the time to take complexity out of workplace relations and add certainty and flexibility. Now is the time to focus on the economy not on workplace relations beat ups. This way, our currently excellent employment conditions can be at least maintained and our wages can start to rise again. Then we can focus on what really concerns middle Australia: pensions, housing affordability, health and education.

Peter Strong is the chief executive of the Council of Small Business of Australia

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Peter Strong

Peter Strong is chief executive of the Council of Small Business of Australia.

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